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Credit card usage is dropping among the millennial generation. A surprising 67% of Americans between 18 and 29 years of age have no credit cards at all, according to a recent survey. That compares to only 45% of Americans between the ages of 30 and 49, and 38% of those aged 50-64 without credit cards. At 32%, even less Americans aged 65 and over are without a credit card.
The 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act probably played some part in the decrease by making credit cards difficult to obtain for those under age 21. Whopping levels of student debt also play a role, as millennials are wisely afraid to add more debt to their loan obligations.
Unemployment may be keeping some millennials from qualifying for credit, but others appear to be avoiding credit cards as a matter of principle.
Given America's soaring credit card debt, that is a positive development… or is it? Consider some of the potential advantages of credit card use.
Credit.com suggests that the average person without credit cards could pay almost $160,000 in extra interest over a lifetime when compared to the interest rates acquired through responsible credit card use. While there are many assumptions involved in that figure, the principle is sound.
However, many millennials are putting more emphasis on the negative side of credit cards, such as these examples.
The most responsible path is to use cards sparingly, pay them off in full each month, and stay at a small fraction of your credit limit (10% or less if possible). This strategy will give you the best credit rating without increasing your debt.
Avoiding credit cards is advisable if you cannot use them responsibly. However, it is better to learn how to use cards sparingly and intelligently.
The same properties that can cause you to run up credit card debt (such as lack of self-control, poor budgeting and overspending) are going to cause problems in other areas of life eventually. Once you get those habits under control, you may not feel the need to avoid credit cards.
Originally Posted at: https://www.moneytips.com/why-are-millennials-avoiding-credit-cards
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